Your VP of HR has requested that you consider increasing the number of contingent employees from 20% currently to 40%. This will considerably lower your labor costs. However, you also know that the total of 500 production employees you have at your plant, you never drop the headcount below 350, even in the slow season. If you reduce the fixed workforce to 60%, you are concerned that you will lose critical skillsets and this could result in productivity losses, accidents, quality problems, etc. Instead you propose that you only increase the contingent labor by: (a) 200 workers (b) 50 workers (c) 150 workers (d) 100 workers

Jackie Iverson was furious. She was about ready to fire Tom Rich, her purchasing agent. Just a month ago, she had given him a salary increase and a bonus for his performance. She had been especially pleased with his ability to meet or beat the price standards. But now, she found out that it was because of a huge purchase of raw materials. It would take months to use that inventory, and there was hardly space to store it. In the meantime, space had to be found for the other materials supplies that would be ordered and processed on a regular basis. Additionally, it was a lot of capital to tie up in inventorymoney that could have been used to help finance the cash needs of the new product just coming online. Her interview with Tom was frustrating. He was defensive, arguing that he thought she wanted those standards met and that the means were not that important. He also pointed out that quantity purchases were the only way to meet the price standards. Otherwise, an unfavorable variance would have been realized. Required: 1. CONCEPTUAL CONNECTION Why did Tom Rich purchase the large quantity of raw materials? Do you think that this behavior was the objective of the price standard? If not, what is the objective(s)? 2. CONCEPTUAL CONNECTION Suppose that Tom is right and that the only way to meet the price standards is through the use of quantity discounts. Also, assume that using quantity discounts is not a desirable practice for this company. What would you do to solve this dilemma? 3. CONCEPTUAL CONNECTION Should Tom be fired? Explain.

Artisan Metalworks has a bottleneck in their production that occurs within the engraving department. Jamal Moore, the COO, is considering hiring an extra worker, whose salary will be $55,000 per year, to solve the problem. With this extra worker, the company could produce and sell 3,000 more units per year. Currently, the selling price per unit is $25 and the cost per unit is $7.85. Using the information provided, calculate the annual financial impact of hiring the extra worker.

David Kelley is considering the implementation of an incentive wage plan to increase productivity in his small manufacturing plant. The plant is nonunion, and employees have been compensated with only an hourly-rate plan. Julie Phelps, Vice President–Manufacturing, is concerned that the move to an incentive compensation plan will cause direct laborers to speed up production and, thus, compromise quality.   Step 1 - With that information in mind, discuss the following questions.  Your posting should be at least 500 words* in length.  This means you should elaborate on your answers, not simply answer each question with one or two words.  You should also reference information already learned in our studies. How might Kelley accomplish his goals while alleviating Phelps’ concerns? Does the compensation have to be all hourly rate or all incentives? Can incentive compensation also apply to service businesses?

Setting materials, labor, and overhead standards is challenging. If standards are set too low, companies might purchase inferior products and employees might not work to their full potential. If standards are set too high, companies could be unable to offer a quality product at a profitable price and employees could be overworked. The ethical challenge is to set a high but reasonable standard. Assume that as a manager you are asked to set the standard materials price and quantity for the new 1,000 CKB Mega-Max chip, a technically advanced product. To properly set the price and quantity standards, you assemble a team of specialists to provide input. Required Identify four types of specialists that you would assemble to provide information to help set the materials price and quantity standards. Briefly explain why you chose each individual.

The subject is Managerial Accounting

A risk-neutral worker can choose to exert either low or high effort. The manager cannot observe the worker's action, but the manager can observe the realized revenue for the firm - either $200 or $600. The relationship between effort and revenue is shown below. Use this information to answer questions #12 and #13. High Effort Cost for worker= $40 Prob(Rev = $200) = 20% Prob(Rev = $600) = 80% Low Effort Cost for worker= $0 Prob(Rev = $200) = 80% Prob(Rev = $600) = 20% 12. Instead of offering a flat wage, the manager offers the worker 20% of the firm's realized revenue. Given this labor contract, the firm's expected profit will be a. $224 b. $280 c. $376 d. $416 e. $520 13. What's the smallest percentage of revenue the firm can offer to incentivize the worker to choose high effort? a. 6% b. 10% с. 16.7% d. 20% е. 33.3%

As part of his cost-reduction efforts, Fletch is interested in reducing labor costs. He asks you to evaluate the financial impact of a proposal involving an alternative labor contract for manual finishing labor (MAN-5). Under the proposed contract, the company would guarantee a 40-hour workweek for these employees. The hourly wage under the guaranteed 40-hour workweek would be $14 instead of $15. Based on the number of MAN-5 employees that the company plans to employ, this means that the company is committed to paying its MAN-5 employees for 1,600 hours each month, even if there is not enough work to keep them busy. If the number of MAN-5 labor hours per month is higher than 1,600 hours, MAN-5 employees will receive time-and-a-half overtime pay. MACH-2 labor hours will not be impacted. To fulfil Fletch’s request, first, insert a new worksheet at the end of the Excel template and set up a new direct labor budget (only for MAN-5). Then, answer the following questions: a. Calculate the…

Yacama Shades supplies sun-blocking shades to home remodeling supply stores such as Home Depot and Lowes as well as discounters such as Walmart. The CFO is worried about inflation and the effect on Yacama Shades' financial results. The variable production costs are $150, and fixed costs amount to $2 million. Production engineers have advised management that they expect unit labor costs to rise by 20 percent and unit materials costs to rise by 15 percent in the coming year. Of the $150 variable costs, 50 percent are from labor and 20 percent are from materials. Variable overhead costs are expected to increase by 10 percent. Sales prices cannot increase more than 6 percent. It is also expected that fixed costs will rise by 13.3 percent as a result of increased taxes and other miscellaneous fixed charges. Presently, the company sells 33,000 units for $400 per unit. The company wishes to maintain the same level of profit in real dollar terms. It is expected that to accomplish this…

At the end of a long day of training, Steven and Carol are visiting over one last cup of coffee. The final segment of the training session, yet to come, is a refresher on support department cost allocation methods. Steven is thinking of skipping out early, since his company firmly believes in only one of these methods. Steven: I'm telling you, Carol, the reciprocal method is the only way to go. It's by far the most accurate, and even though it takes a little bit of set-up in Excel (or something similar), the additional accuracy is worth it. Carol: Carol knew that this session was on the schedule for today's training, so she brought her own direct method cost allocations along. She quickly pulled them out of her bag and showed Steven the following. Costs A's time (in hours) provided to B's time (in hours) provided to Costs Really? At our company we have always used the direct method. We find that it's much easier to explain this approach to our operating managers, and everyone…